Why is the Price of Bitcoin Falling? How Low Will It Go?

For the past month or so, the price of Bitcoin has been on a decline. Shortly after the New Year’s it feel through the floor of US$ 300.

As I write this article, the price of Bitcoin is US$ 270. Why is the price falling? If you were to ask me, I would say I’m not sure.

Too much liquidity in the market? People cashing their Bitcoins after the holidays, where they could have racked up some bills. People might be holding on to a few bitcoins, and decided to cash them out, and pay their bills (the falling prices certainly don’t help).

Which brings me back to the first culprit, too much liquidity? Is there such thing as too much mandatory liquidity? Then I came across this tweet by Spencer Noon, which kind of summed it up:

The article on Reddit can be read here. Its a pretty accurate depiction (in my opinion) as to what is contributing to the downfall in price for Bitcoin. The tl;dr version is: 1,470 Bitcoins have to be sold everyday due to cover electricity costs by miners. These are the coins they have to sell to be able to sustain the utility costs they incur due to mining.

Contact

You can easily see my real-time calendar availability and schedule a time with me by clicking here.

About Faisal Khan

Faisal Khan is a banking / payments consultant specializing in cross-border payment systems and a digital money evangelist. He is the co-host of Around The Coin, a weekly podcast on banking, money and payments. Mr. Khan is an advisor to Hippocorn (a VC company out of Denmark) as well as a talent scout for Series A & B financing for various fintech VCs/funds. He is also a frequent contributor to popular Q&A site Quora.